Tag Archive: ITS

The New York Stock Exchange or NYSE began at 68 Wall Street under a buttonwood tree on May 17, 1792 with the signing of the Buttonwood Agreement by 24 stock brokers. The signing of Buttonwood marked the birth of what would later become New York’s largest trading floor and exchange.

By 1975 the NYSE had survived two world wars and the Great Depression. The Dow Jones Industrial Average (DJIA), established as a measure of industrial sector performance, hovered around $800. And Congress enacted new legislation governing the electronic collection and reporting of all NYSE stocks. Implementation of this legislation marked the introduction of computers on the trading floor.

In 1978 the NYSE implemented the ITS or Intermarket Trading System which used computers to connect the NYSE with other markets. The intelligent technology behind the ITS spawned new markets including the NASDAQ in 1982, replacing the old “over the counter” or OTC market. Today, computers are used for everything from automated trades to podcasts broadcast from the trade-floor. People can now trade stock at four in the morning from the comfort of their own home.

Not only do the computers provide valuable information, they also do some of the thinking for us and offer an “emotionless” and objective view of the market. Today computers auto-generate one third of all trades.

As the DJIA began to fluctuate amid fears over the state of our economy, humans began to sell. As people sold and stock prices came crashing down, the computers began buying, stock prices rose slightly, then fell again amid more worries. While computers may have prevented a dramatic market crash (worse than the $777 loss two weeks ago), they may have also indirectly contributed to the overall losses.

Could it be our system wasn’t designed to handle the enormous influx of real-time information disseminated by individual investors and the subsequent trading of stocks based on this information? In other words, do computers aide in the crime of wide-spread market panic?